Expectations that disposable income will decrease in the future will
A)shift the current consumption function upward
B)shift the current consumption function downward
C)make the current consumption function flatter
D)result in a movement downward along the current consumption function
E)have no effect on the current consumption function

Question

Quizplus · Accepted Answer

If individuals expect their disposable income to decrease in the future, they will likely decrease their current consumption to save more in preparation for the future. This will shift the current consumption function downward.

Expectations That Disposable Income Will Decrease in the Future Will